Coinbase Urges UK to Reconsider Limits on Sterling Stablecoin Holdings

Coinbase's Senior Policy Vice President, Tom Duff Gordon, stated at a hearing of the UK House of Lords Financial Services Regulation Committee that the UK's current proposed limits on Sterling stablecoin holdings could stifle financial innovation and weaken London's competitiveness in the global digital finance landscape. He noted that the Bank of England's proposed individual holding limit of £20,000 and a corporate limit of £10 million are too low to support the role of stablecoins as efficient settlement infrastructure.

Duff Gordon emphasized that if the restrictions persist, Sterling stablecoins will struggle to effectively participate in the tokenized trading of bonds and gilts, thereby losing a crucial position in capital markets. He further pointed out that stablecoins, compared to traditional bank card payment systems, have the advantages of near-instant clearing and extremely low costs, making them an important tool for promoting the upgrading of domestic payment efficiency.

To build a more competitive regulatory framework, he put forward five recommendations, including aligning with international regulatory standards and allowing platforms to offer incentives to stablecoin holders to enhance usability and ensure financial stability. He specifically mentioned that bringing real-world assets on-chain must be accompanied by the development of corresponding tokenized cash instruments, and Sterling stablecoins are expected to strengthen the influence of the Pound in the global digital currency system, breaking the dominance of the US dollar. Addressing financial stability concerns, Duff Gordon pointed out that, unlike traditional banks, stablecoins are 100% reserve-backed and do not involve maturity mismatches, so the risk of runs is lower. The liquidity support mechanism planned by the Bank of England, which allows issuers to exchange high-quality liquid assets for cash by pledging them during periods of stress, can effectively avoid forced asset sales. Coinbase UK CEO Keith Grose added that regulatory clarity, proportionality, and reliable bank access are key to ensuring that companies remain operating in the UK. If the rules are ambiguous, companies may move their business to more regulatory-friendly jurisdictions. Only a well-designed and clearly implemented regulatory framework can ensure security while stimulating innovation and consolidating the Pound's core position in the next generation of digital payments and the digital economy.